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The CEO of Binance Changpeng Zhao has broken his silence on the Paxos-SEC BUSD development in a Twitter thread.
Binance CEO Changpeng Zhao has spoken on the Securities and Exchange Commission’s (SEC) BUSD crackdown. Referencing the ongoing probe and impending SEC lawsuit against Paxos, Zhao said although the embattled company issues and lists BUSD, the funds remain safe. The CEO pointed out that Binance licenses its brand to Paxos, specifying that BUSD is a Paxos-issued and owned product.
In a series of tweets, Zhao explained that the New York Department of Financial Services (NYDFS) directed Paxos to cease minting amid the allegations. Furthermore, the Binance CEO suggested that the SEC BUSD probe has triggered the crypto industry and would lead to the coin’s decline over time. However, despite a projected decrease in the BUSD market cap, Zhao opined that Paxos would continue to service the product. The Binance chief executive officer also added that the New York-based blockchain fintech would keep managing further redemptions.
Zhao also pointed out the Paxos funds are safe and fully covered by bank reserves which have been audited several times by numerous audit firms. On the conversation between Binance and Paxos, he added:
“Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly, e.g., move away from using BUSD as the main pair for trading, etc.”
Zhao also revealed that Binance is taking further precautions by covering other projects within all regulatory hotspot jurisdictions. As the Binance chief executive put it:
“Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm.”
Binance CEO Has No Details of SEC BUSD Lawsuit Against Paxos
Zhao emphasized that he does not know about the alleged SEC lawsuit against Paxos regarding investor protection violations. However, he added that ruling BUSD as a security would profoundly affect the entire crypto industry. According to Zhao, a conclusion like that would determine how the industry develops in affected jurisdictions.
Zhao’s assessment of the SEC vs. Paxos development comes on the heels of a statement by a Binance spokesperson regarding stablecoins. Explaining that BUSD is a stablecoin with a 1 to 1 backing that the NYDFS regulates, the spokesperson said that “stablecoins are a critical safety net for investors seeking refuge from volatile markets and limiting their access would directly harm millions of people across the globe.”
Furthermore, the Binance representative added that the leading crypto exchange would continue to monitor the SEC situation. However, in the meantime, Binance’s global users would still be privy to a wide array of other stablecoins.
Last week, the SEC enforced compliance from another crypto exchange, Kraken, over its US staking services. The San Francisco-based company agreed to discontinue such operations and pay the SEC a $30 million fine.